Market Review: Hang Seng Index Continues to Decline, Alibaba Remains Steady, Lithium Stocks Rise Against the Trend

Market attention is focused on the increasingly tense relations between China and Japan, leading to a continued decline in Hong Kong stocks today (17th). The US stock market rebounded from a low last Friday (14th), with the Dow Jones down 0.7% and the Nasdaq up 0.1%. At the time of writing, the yield on the US 2-year Treasury bond fell to 3.598%, and the yield on the US 10-year Treasury bond fell to 4.127%, while the US dollar index rose to 99.4. The latest Dow futures rose by 92 points or 0.2%, while the Nasdaq futures fell by 230 points or 0.92%. The Shanghai Composite Index fell by 18 points or 0.46% to close at 3,972 points, the Shenzhen Component Index fell by 0.11%, and the ChiNext Index fell by 0.2%, with a total trading volume of 1.91 trillion yuan in the Shanghai and Shenzhen markets.

The Hang Seng Index opened down 130 points, with the initial decline narrowing to 40 points, reaching a high of 26,531 points, but later in the afternoon, the decline expanded to 320 points, hitting a low of 26,252 points. The index closed down 188 points or 0.7% at 26,384 points; the Hang Seng China Enterprises Index fell by 69 points or 0.74% to close at 9,328 points; the Hang Seng Tech Index fell by 55 points or 1% to 5,756 points. The total trading volume for the day was 217.613 billion yuan. The total trading volume of northbound trading was 91.376 billion yuan, while southbound funds had a net inflow of 8.448 billion yuan today (with a net inflow of 12.887 billion yuan on the previous trading day).

The Ministry of Culture and Tourism of China has reminded Chinese tourists to avoid traveling to Japan in the near future. An article published in the "CCTV" YuYuanTan Tian column indicated that the Chinese side is prepared for substantial countermeasures against Japan. Trip.com (09961.HK) fell by 3.6% to close at 555.5 yuan, while Japan Travel (06882.HK) dropped by 5.4%. Fast Retailing (06288.HK) fell by 6.3% to close at 26.46 yuan, and Nissin Foods (01475.HK) dropped nearly 6.1%. However, Master Kong (00322.HK) saw its stock price rise nearly 2.1%, making it the largest gainer among blue-chip stocks.

【Fast Retailing and Nissin drop, Xiaomi softens before earnings】

Tencent (00700.HK) fell by 0.7% to close at 636.5 yuan, while Alibaba (09988.HK) remained stable throughout the day, closing flat at 154.9 yuan, with a trading volume of 17.642 billion yuan. According to "Jiemian News," Alibaba's newly launched AI application "Qianwen" faced a surge in traffic on its first day of public testing, causing some services to experience congestion and interruptions due to an influx of users. Subsequently, the topic "Alibaba Qianwen crashed" trended on Weibo. In response, Alibaba Qianwen stated, "All good, in good condition, welcome to ask."

Baidu (09888.HK) fell nearly 3%, and Xiaomi-W (01810.HK) saw its stock price decline by 0.9% to close at 41.96 yuan. Xiaomi is set to announce its third-quarter earnings tomorrow (18th), which may be affected by a slowdown in smartphone and AIoT sales due to declining shipments in China and India. According to IDC data, Xiaomi's global smartphone shipments reached 45.3 million units in the third quarter, a quarterly increase of 2%, with shipments in the Chinese market at 10 million units Market expectations are that Xiaomi's electric vehicle deliveries in the third quarter will exceed 100,000 units, which will have a positive impact on its performance. Earlier, our website compiled predictions from 14 brokerages, estimating that Xiaomi's adjusted net profit for the third quarter of 2025, measured by non-International Financial Reporting Standards, will range from RMB 9.51 billion to RMB 10.557 billion, an increase of 52.1% to 68.9% compared to RMB 6.252 billion in the same period last year, with a median of RMB 10.051 billion, representing a year-on-year increase of 60.8%. Based on predictions from 8 brokerages, Xiaomi's profit for the third quarter of this year is expected to range from RMB 8.939 billion to RMB 10.941 billion, an increase of 67.4% to 104.9% compared to RMB 5.34 billion in the same period last year, with a median of RMB 10.183 billion, representing a year-on-year increase of 90.7%.

Xiaomi's smartphones are mainly concentrated in emerging markets, and the lower average selling price may drag down quarterly revenue growth. Additionally, with rising component costs such as DRAM and NAND Flash, investors will focus on Xiaomi management's plans regarding smartphone product costs and gross margins, guidance on shipment volumes for the coming quarters, profitability of the automotive business, capacity expansion, and gross margin delivery plans.

【Stocks Decline with 1,317 Falling, Lithium Stocks Continue to Rise】

The Hong Kong stock market has turned weaker, with a rise-to-fall ratio of main board stocks at 18 to 32 (compared to 14 to 36 the previous day). A total of 1,317 stocks fell (down 2.4%), with 20 constituent stocks of the Hang Seng Index rising and 62 falling, resulting in a rise-to-fall ratio of 23 to 70 (previous day 14 to 82). The market recorded short selling of HKD 44.319 billion today, accounting for 23.146% of the total turnover of shortable stocks, which was HKD 191.474 billion.

Today, the main contract for lithium carbonate futures in mainland China rose by 9%, with prices reaching RMB 95,200 per ton. Lithium stocks continue to be favored, with Ganfeng (01772.HK) and Tianqi (09696.HK) seeing their stock prices rise by 9% and 5.7%, respectively, throughout the day.

According to domestic media reports, at the 10th International Summit on Power Battery Applications held today, Ganfeng Lithium (01772.HK) Chairman Li Liangbin stated that global lithium carbonate demand is expected to reach 1.45 million tons in 2025. However, due to increased demand in the second half of the year, the annual demand figure is expected to be updated to 1.55 million tons. Meanwhile, supply capacity is over 1.7 million tons, resulting in an excess of about 200,000 tons, which is why prices have been relatively low this year. He predicts that lithium carbonate demand will grow by 30% in 2026, reaching 1.9 million tons, while supply capacity is expected to increase by about 250,000 tons after assessment, leading to a basic balance between supply and demand, with potential upward price movement for lithium carbonate. If demand growth exceeds 30% next year, or even reaches 40%, supply may not balance in the short term, and prices could break through RMB 150,000 per ton, or even RMB 200,000 per ton